I am writing in lamins terms. And this may not directly associate with article, yet I tHere I am a mother of wonderful children that never cease to amaze me. Yet I see friction in the world and I like any concern parent, sits thoughtfully to find ideas to contribute to our world. I am not an accountant or an economist, yet I have run a successful small family business. So here goes an idea, not with all the write terminology, yet something to consider.
Economics
The Missing Factor
Why should an industry pay for another industry?
It takes years and studies to understand an industry. Why should an industry learn more than its own?
An industry that produces on a continuous basis, of needed products, has overhead costs or another way to put it, are supply costs, labor costs, other variable cost, like electricity, gas, and so on, and then setting the price of the goods produced.
What is missing is the hiring factor to produce the goods. Especially for production companies that rely on the prices being set right in order to pay sustainment of an industry and profit.
Micro and Macro Economics refines ideas to compete, yet realizing alleviation is needed in the system, by incorporating other factors that would justify and explain need for it to be part of the equation.
Given or designating employment for everyone would enable this production hiring factor to come from everyone’s pay and the distributed directly to the production industry and not anywhere else.
Question:
If I want a car, some food for my family, a new TV, or some clothes to name a few, do I call the industry and hire them to produce it? Do the collaborating pubic request the jobs to be done? No.
We have recognized the wants or demands as their called to help establish the economic system.
The production hiring factor would alleviate economic stress.
The production industry has to rely on promotion of their products to get them sold.
Yet when its goods already are a understandable need, the promotion is not needed per say. The production hiring factor is needed to generate revenue for the industry, much needed.
I hope someone can understand what I am trying to convey.I
think it is important enough to convey.

Banks irresponsibly lent money to people who claim they make a million bucks as janitors. When these subprime mortgages went sh*t, it causes home values to fall. People who were working hard and getting sensible loans, but living on the same street as one foreclosed home, their home values got hit. They continue to pay their mortgages until companies they work for start to sense lower demand and laid off people. Now good, honest, hard-working people through no fault of their own, are in trouble.

People want jobs. Many of them are taking jobs with a huge pay cut. I personally know at least one woman who is being paid one-third what she was paid before the crisis. She's on the brink. She called Citigroup to see if her loan could be modified (it was laready upside down). They pretty much give her the middle finger (claiming that she made too much, I think they intentionally misinterpreted her pay stubs). They actually hung up on her after being rude to her. She should walk away and stick it to the banks. She should start over. She can because if she paid rent instead of her mortgage, she would lead a dramatically more comfortable life. This is a common story I hear.

Banks aren't lending because they are not being realistic about the default risks on the mortgages they already hold. If they restructured the loans, they could put a back stop to this albeit at a loss. But they are very short-sighted. This is why I think the government needs to nationalize the mortgages.

Banks don't have to look out for the economy. If they can get rich by killing the economy, they will. It's just the way the game is structured (or unstructured because of deregulation). The government needs to step in.

One thing that seemingly everybody fails to understand is that people actually make enough money to pay their monthly mortgage payments. It's just that because of the enormous interest hikes in 2005-2007 they have fallen behind. The problem would be solved permanently with a one time tax break on mortgage interest expenditures. They could even force the banks to finance it by making an equally sized extra tax on mortgage interest income. The crises would end over night.

The bailouts might have saved the banks. But if they instead had bailed out the borrowers, they would also have saved the banks. The banks just took the money and invested them in commodities and oil. It even makes sense. Why would the banks borrow money to people who are completely in crises mode?

"Maybe so, but spending less when households are in no shape to pick up the slack seems a sure-fire way to keep an anaemic recovery off-colour."

How can you have this job? What part of "$1.6 trillion deficit" don't you understand? The country is leaning over the edge of the abyss.

Second: Never in the history of mankind has government over spending let to prosperity. NEVER. Do we really need to explain this over and over again? OK well here goes again. In order to increase productivity you need to employ best practices. In the private market the consumers go for the best products at the cheapest price. This leads to an ever increasing productivity. THIS DOESN'T HAPPEN WITH GOVERNMENT SPENDING. Therefore by decreasing government spending, you move resources from the unproductive parts of society to the productive, thus increasing production, ie. increase GDP, export more, more optimism etc, etc. You get picture now? For every government job you eliminate, you create 2 private sector jobs.

I can understand you want to give money to the poor, help the sick etc. But just because you're a liberal, does not mean you absolutely have to be stupid. Understanding how the economy works in the real world, actually improves your chances of feeding the poor.

Once again the Federal Reserve and their crony Economists are trying to feed us lies about an expected recovery. The facts are there and it is evident that we are merely kicking the can down the road.
However, unlike its European counterparts, the United States has a chance to cut spending before it begins. If we repeal healthcare, impose a higher retirement age, and reduce social program spending we have a chance to avoid a hemorrhaging like never seen before.

"Leaving 10 percent of the population uninsured is like leaving a tenth of the country with no police or fire service, a walled-off ghetto for the poor."

This is an intersting way to look at the issue. And it rings true.

"The root of the problem is a dysfunctional political system."

When Mitch McConnell said that his number one job was to make sure that Obama is a one term president, I felt ill. I would have thought that for any elected official his or her number one job ought to have been to help to fix the country's problems regardless of who occupied the Oval Office.

"There's no shame in placing country above party" spoken by the warren Christopher character in the movie "Recount".

What the Keynesians fail to realize is that, even as Keynesianism is showing its limits, Keynes himself wouldn't recognize his modern adherents. His theories are currently being twisted to support a crony-corporatist/statist hybrid bordering on fascism.

Keynes advocated government counter-cyclical behavior to moderate business cycles. His stimulus during market downturns was supposed to be put into productive activities that yielded real productivity enhancing assets, not "digging holes and filling them in" as he derisively called the make-work in which government agencies often engage.

That speech was a forehead slapping eye-opener. How clueless can the chief executive be? He's the big proponent of Keynesianism and so completely misunderstands the theories he's pushing into government policy.

He proceeded to demonstrate his cluelessness by using the stimulus to reward every Democratic party constituency that asked for it. Much or it went to prevent public employee union layoffs. Feminist groups complained that the touted infrastructure spending would go to "burly man" activities, and pushed a concept of "human infrastructure" to get the majority of that portion funneled to female dominated activities. (http://www.weeklystandard.com/Content/Public/Articles/000/000/016/659dkr...) Never mind that the recession is justly called a "man-cession". Stimulus is supposed to go to underperforming economic sectors, and real infrastructure spending (done by "burly men") would be in-line with Keynes's views.

So the whole thing has been perverted to serve corrupt political interests. Any wonder that the economy is again slumping?

The real reason Keynesianism is out of favor is that politicians cannot be trusted to enact sound politically neutral uncorrupt economic policy. Best to leave it to the unbiased invisible hand. That's why von Mises and Hayek are increasingly in favor.

A litany of black swans? Then, black swans could no more astonish us. It is a normal situation when some swans are black. Accidents happens from time to time. Nothing is wrong. Nothing is fragile but the algorithm for investment bankers' software. Don't eliminale those events as special or rare. The first thing you'd better to do is to kick the buttocks of DSGE-ites and rational expectationists and hire floor traders again.

All this paranoia and handwringing about all-knowing, all-seeing, all-powerful 'corporate elites'.
General Motors, once the largest, most 'powerful' corporation on face of the world had to rescued by government with taxpayer dollars - pathetic! As soon as people stop buying the product or service this so-called power ceases.

All this bitching about the evil big corporations and the longing to rid the earth of them and yet the most left wing US Adminisration ever steps in to save the villains in their hour of need? GM, AIG, Goldman Sachs, the list goes on all bailed out of their wholly self-inflicted messes. It was the Left's golden opportunity to glory in their demise and yet St. Obama stepped and save them! The hypocrisy is overwhelming.

Creationists and flat-earthers, indeed. They have elevated the invisible hand to the status of a god. It is not be questioned, in any circumstances. The American Taliban will defend to the death its right to pay higher prices for inferior health care, as long as this is dispensed through the holy transubstantiation of the free market.

There is plenty of academic research and real-world evidence out there on why government-run health systems are more efficient and cheaper, for anyone who's interested. It's not hard to understand. But the Vatican doesn't want to listen to Galileo; it prefers to burn him at the stake.

It's a huge irony that Obama gets attacked for "socialist" policies for a health-care reform that doesn't even include a public option. There is not a single European country where Obama would get elected with a plan as right-wing as that. We like our universal health care. We don't consider it socialist; we just consider it civilized. Leaving 10 percent of the population uninsured is like leaving a tenth of the country with no police or fire service, a walled-off ghetto for the poor.

The root of the problem is a dysfunctional political system. It is difficult to get a man to understand something when his salary depends upon his not understanding it. Washington is dominated by lobbyists and money-politics. The insurance companies and drugmakers killed the public option. Banks blame excess government regulation for causing the financial crisis and recession, a narrative that is exactly the opposite of the truth. Everyone's incentive is the perpetuation of a system of welfare for the rich, paid for by the majority.

America could do with a dose of real socialism. I doubt they'll get it.

PKP801 - and who listened to B and G? A leader surrounds himself with GOOD people and then decides which to listen to and then decides.

Obama et al have done nothing to help the economy. They have only given bankers more money at 1% to lend to the government at 4% and thereby enrich themselves at taxpayers expense. Obama et al support levying more taxes based on the UN IPCC unproven theory of "anthropogenic CO2 causes global warming". Who wins - Gore at al.

The Great De-Leveraging will continue to grind slowly and painfully away world wide. 60 years of over borrowing and over spending by governments will not end quickly or painlessly. The socialistic governments that perpetrated this hoax on taxpayers will now have to deal with options that are VERY BAD or WORSE. Hopefully, taxpayers will remember the left wing politicians that spun the Keynesian hoax" on them.

The most special of the special factors must be the decreasing competence of the American people, and, hence the increasing incompetence of the American political class. We have squandered what amounts to the GNP of the rest of the world on mindless foreign adventures, unpatriotic tax cuts, and numerous sacred cows. If my grandfather was still alive today and I told him about the blatant stupidity of the Bush years he would have no sympathy. "D**N it, You all are just getting what you deserve."

kxbxo's comment reminds me of the article, written periodically, in which a frustrated analyst lays out *yet again* what an Israeli-Palestinian peace deal would have to look like. Everybody who has seriously analyzed the situation knows it's obvious, but none of the principals will admit it publicly.

1. Americans face a household debt to disposable income ratio of 120% today vs. 90% in 1990. This is mostly mortgage debt. Write it down 30% and impose the hit on global bondholders, the only pool of money large enough to absorb the hit with little damage. Stiglitz, Krugman, Ferguson, Sachs etc. have all recommended this or similar. Put in a 20% minimum down payment so it never happens again.

2. America has a trade deficit of about $500 billion, which represents 10 million jobs in other countries making stuff consumed in America. We have to get this down to zero by whatever means necessary. This is a combination of energy policy (to reduce oil imports), protectionism and capital controls, and a weaker dollar to make U.S. exporters more competitive.

3. Education is key to competitiveness and unemployment. Only 5% of college educated Americans are unemployed, vs. 15% without high school diplomas. Everyone has to graduate, in reform schools if the public school cannot handle the person.

4. Stimulus is not the answer; it just treats the symptoms. We need to raise taxes and cut defense spending in the short run to balance the budget. We can offset the defense spending cuts in the short-run if necessary with clean energy infrastructure projects.

5. The per-capita cost increases in Social Security and Healthcare must be restrained. Social security is easy (raising the retirement age, reducing annual cost of living increases, removing the cap on the payroll tax). Healthcare is harder, but plenty of other countries have figured it out at half the cost, with no riots in the streets.

This has been the most pompous, vindictive, corrupt administration in my 60 years on the planet as the first explanation of why Obama has been "thrown under the bus". Many seem to dismiss the authoritarian arrogance of Obamacare "waivers" or the near miss disaster of cap and trade and climate fraud efforts that still lurk in the wings. Energy? Could have been more regressive by design??

This is a failed administration with few of the 9/11 excuses of the past one although we are left a bi-partisan truth. Hoover was deeply flawed is as much he was like FDR, usally this is completely ignored in leftist educational camps. Bush II was a Keynesian moderate as Obama is an extremist. All deserve to be condemned on economic thinking.

In the late 20's and 30's when credit collapsed, most of the debt wasn't backed government. It went away, and there were dreadful consequences. The current system if instituitionalizing future obligations and bad debts is what needs to be reformed, this is even worse than defaults and "0". There is no way at these debt ratios that these obligations will be covered. Hense the society is depressed and different degrees giving up.

Keynes is dead, we need something better and Obama was the wrong man for this time.